Government is yet to give approval for Tullow Oil to drill additional infill wells at the Jubilee oil field, which is meant to boost oil production.
In an e.mailed response to questions posed by the B&FT in the wake of plummeting crude oil prices, Tullow Ghana said it “continues to seek government approval to drill additional infill wells in order to achieve the desired production levels for 2015/2016”.
This, the company added, “is pending submission of a Full Field Development Plan, anticipated mid-2015, which will outline the longer-term plan for Jubilee development”.
The B&FT understands that the two parties are not on the same page regarding the infill wells, which are drilled between producing wells for the purpose of more efficient recovery of petroleum from a reservoir.
The Petroleum Commission would rather the company made good its commitment to do a full field development plan instead of the proposal to drill the four additional infill wells — one for production and three for water injection.
Three months ago when the matter became public, newly-appointed Minister for Power Dr. Kwabena Donkor told the B&FT that the commission should insist on the full development plan since drilling the infill wells would not optimise exploitation of the resource.
The long-term interest of the nation, he said, should take precedence over any other consideration.
“Our major interest is the optimal management of the resource and therefore the reservoir, so that Ghana’s long-term interest is better protected. It is better to have a plateau of revenue in extraction than have spikes,” he said.
A full development plan would give a clearer idea of what the field contains, and what the most cost-effective way of developing it would be.
In the wake of plummeting crude oil prices, some have suggested the country should consider reducing oil production.
Asked whether the situation will affect oil production at Jubilee, Tullow responded thus: “The Jubilee Field exceeded its gross production target during 2014 — averaging 102,000 bopd despite the restrictions caused by delays in construction of the onshore gas processing plant.
In 2015 average gross production is expected to be at a similar level, with production building toward the FPSO capacity by the end of the year.”
Tullow Plc is meanwhile in the process of reviewing its capital expenditure and cost base, and “the cost base includes headcount”.
Asked to comment on how the plummeting oil prices is affecting its business, the company said: “Our projects are long-term, multi-decade projects, and variations in the oil price — which have to be expected over the life cycle of these very long projects — don’t fundamentally change their value. However, as announced back in November, in light of current commodity prices Tullow is reviewing its capital expenditure and cost base to ensure that we are well-positioned for future success”.
Currently, the Jubilee Field has twelve production wells, eight water injection wells, and three gas-injection wells.
Oil prices, meanwhile, continue to witness a decline. Brent Crude was seen at US$47.69 on Monday, losing more than 50% of its value since June last year.